Event: the company released its semi-annual report for 2020, and during the reporting period, the company realized income of 2.054 billion yuan, + 50.14% year-on-year, of which Q2 realized operating income of 1.218 billion yuan, + 75.49% year-on-year; net profit of 126 million yuan, + 127.51% over the same period last year. Of which, Q2 realized net profit of 118 million yuan, + 234.18% compared with the same period last year.
Revenue from the slide rail business has declined and cross-border e-commerce is growing rapidly. During the reporting period, the company's slide rail business realized operating income of 232 million yuan, down 10.71% from the same period last year. Cross-border e-commerce business benefited from rapid growth, sub-category power supply category, Bluetooth audio category, small household appliances category, mobile computer peripheral category, personal health care category, home private category respectively achieved business income 2.57 4.01pm 1.47pm 1.59 / 247 million yuan, year-on-year-16.30%, respectively, the rate of increase was-16.30%, 70.78%, 143.72%, 185.11%, 83.73%, and the income of all categories except power supply increased. Among them, the income from small household appliances and computers and mobile phones grew by more than 100%.
Affected by the change in income structure, the increase in the company's overall gross profit margin led to an increase in net profit margin. Affected by the increase in the proportion of the company's cross-border e-commerce business during the reporting period, the company's comprehensive gross profit margin was 48.48%, year-on-year + 3.71pct, of which the slide rail business gross profit margin was 16.18%, year-on-year-2.72%. Cross-border e-commerce categories in the power category (+ 3.26pct), small household appliances (+ 2.03pct), personal health care category (+ 1.2pct) gross profit margin increased Gross profit margins of Bluetooth audio (- 3.77pct) and computer and mobile phone peripherals (- 9.55pct) have declined. During the reporting period, the expense rate of 38.22% was basically stable (+ 0.24pct), and the increase in gross margin led to an increase in net profit margin (2.36pct) to 6.39%.
High-quality cross-border e-commerce leader, excellent financial indicators and broad room for growth. The company operates cross-border e-commerce with a "boutique" strategy, with only more than 100 SKU, all of which are independent brands and patented. The company plays a leading role in the research, product design, research and development of customer market demand, so it has higher technical barriers and profit space. A small amount of focus on the SKU business strategy makes the company's inventory turnover faster than the "universal" model, less inventory impairment risk and healthier cash flow. With the further refinement of the company's single product management and the expansion of offline and other channels, the company is expected to maintain rapid growth.
Investment suggestion: taking into account the catalytic effect of the epidemic on cross-border e-commerce, adjust the growth rate of the company's peripheral categories of small household appliances / computer phones to 130% and 150% in 2020 (up from 90%), and increase the company's net profit of 2020x2021 to 3.03 / 394 million yuan, an increase of 104% and 30% respectively over the same period last year, corresponding to a PE of 32.8 times in 2020, maintaining the "highly recommended-A" rating.
Risk tips: goodwill impairment risk; Sino-US trade frictions affect cross-border e-commerce business; epidemic impact on the company's supply chain; risk of dependence on third-party platforms.